A Relentless Focus On Efficiency Can Kill Innovation

Why do organisations who say they are innovative fail to put their money where their mouth is and invest in innovation in the same way Amazon do?

This week I did a slot with Ian Wright on innovation and failure as part of Digital Leaders Week.

Ian posed a killer question during the chat:

Why do organisations who say they are innovative fail to put their money where their mouth is and invest in innovation in the same way Amazon, Google etc do?

I’m not sure I answered the question brilliantly, but this comes down to the choice between efficiency and investing in the future.

Right now – there cannot be a board in the country who is not looking to cut costs. Offices stand empty, a second (and possibly third, fourth and fifth) lockdown looms and the medium term outlook is , at best, problematic. We all have to accept that we’ll be dealing with increasingly limited resources.

None of us can compare ourselves to Amazon – a company who are single minded in their dedication to owning the future. In 2019 their spending on R+D was $35billion which has increased year on year since they spent a paltry £12billion in 2012.

But if Amazon have an R+D to Revenue ratio of say 30%, how much should you spend?

0.5%? 1%? 5%?

As I said to Ian, the answer is you probably don’t know how much you spend at the moment, never mind what spend is right for your organisation.

When Cost Cutting Goes Bad

Right now accountants are running through organisations looking to eliminate every bit of slack they can.  It’s all about getting costs off the books and the swift abandonment of any capabilities not regarded as ‘core’.

The problem is:

Slack can be good.

Under utilised but latent capabilities can be good.

In the book When More Is Not Better , Prof Roger Martin argues that that efficiency needs to be balanced by resilience. He says we need to recognise that slack is not the enemy. In the right amounts, slack contributes to greater resilience. We should stop thinking of “no slack” as an achievable goal. By way of example he says that retailers such as Costco build slack into their staffing to allow employees to provide extra attention to customers.

Cutting slack out of your organisation can severely limit your internal capability for innovation and put you increasingly in the need of something potentially more costly: management consultants.

A piece for the Guardian contains some choice quotes about over reliance on consulting from Lord Agnew, the Cabinet Office and Treasury minister. “We are too reliant on consultants. Aside from providing poor value for money, this infantilises the civil service by depriving our brightest people of opportunities to work on some of the most challenging, fulfilling and crunchy issues. We seem to be ineffectual at harnessing our fast-streamers to do work that is then outsourced to consultants using similar people at a vastly inflated cost. This is unacceptable.”

The news this week that some consultants are being paid £7,000 per day to work on Test and Trace is an extreme example of what happens when you outsource all your capability. Weren’t we once a leader in the development of public digital technologies?

Unacceptable (and crazy maths) , but it’s sadly common practice within Government and our own organisations. I’ve had several younger colleagues say the same thing to me about our own sector.

Outsourcing capabilities defined as ‘non-core’ can lead to a reduction in your overall capacity for innovation. It can also lead to workplace dissatisfaction with career development options and can – in your determination to get cost off the books NOW – increase your costs in the medium term.

As I said in the session this week, a better approach would be to assess what slack you have at the moment and optimise it.

  1. How many people have you got working in roles that have an R+D element?
  2. What value are you getting from these?
  3. How could they be better connected?
  4. How could they help you tackle some of ‘the most challenging, fulfilling and crunchy issues’ that you face?

You cannot match Amazon for R+D spend , but you can emulate a lot of their behaviours.

Innovation and efficiency: It is possible to have it all.

Header Image by Pete Linforth from Pixabay

How To Make Decisions In A World Of Uncertainty When Not Knowing Or Being Sure Of Anything Is The Only Answer We Have (TLDR: Get comfortable with failure..)

In a high stakes environment , where people will die whatever you do next, nobody wants to talk about failure. For companies large and small, to make progress in complex situations means re-evaluating our relationship with the F Word.

Since the pandemic started, we have all spent a greater share of our time confronting difficult questions. Most of those questions are not immediately answerable. It hasn’t even been a year since the virus was confirmed so being able to predict its long term effects on our mental health, our relationships, our behaviours , even our future, is nigh on impossible.

How do we know if a trend is caused by coronavirus, or if it would have happened anyway? 

The typical approach of many companies will be far too slow to keep up. Postponing decisions to wait for more information might make sense during more normal times, but postnormal , surrounded by imperfect and conflicting information, waiting to decide is a decision in itself.

The only way to really make decisions and to forge ahead in periods of radical uncertainty – where environments may change dynamically and independently of the problem solvers’ actions – is to make headway iteratively.

Unfortunately that is the not message we are getting from many of our leaders, nationally and internationally. Strategies are being deployed at short notice against a background of emerging evidence, with advice to the public confusing and changeable seemingly on a daily basis.

In a high stakes environment , where people will die whatever you do next, nobody wants to talk about failure. For companies large and small, to make progress in complex situations means re-evaluating our relationship with the F Word.

Notwithstanding the oft heard corporate mantra about “risk-taking organisations,” few people or organisations are comfortable being associated with a failure. It usually appears as a ‘tell us about a time’ question at job interviews , but the savvy candidate will avoid providing any example of a genuine **** up, and offer a ‘valuable lesson learned’ story instead.

As Phil Murphy recently said “We all fail regularly though don’t we, in various small ways? Is there an unhealthy obsession by organisations seeking to portray faultlessness?”

In an increasingly complex world, where experimentation is called for, not us can remain faultless. There is very little informed debate or discussion about this. Failure is a lot more common in highly uncertain environments than it is in better-understood situations, so why do we not publicly accept this?

The benefits of learning from failure is incontrovertible but we know that organisations that do it well are rare.  Part of this is due to culture and our refusal to let go of the heroic leadership model. Failure is seen as bad, and it sometimes is bad. Very bad. But it is sometimes inevitable, and sometimes even good. 

Building our capacity for intelligent failure

IBM’s Thomas Watson, Sr. said, “the fastest way to succeed is to double your failure rate.” So how can organisations safeguard their existing values and still create a safe failure environment?

The answer is: practice getting better at it.

Rather than something that eludes all but the most creative, intelligent failure is a learned skill that everyone can practice and strengthen.

Change the definition:

People see failure as a bad thing as it has been drummed into us through childhood and the corporate machinery. It has come to mean letting people down. We need to redefine failure as a part of a journey of discovery – in which you’ll learn the possibilities for you and your organisation.

To maintain a psychologically safe environment that celebrates intelligent failure, those who come forward should be rewarded, not punished.

See it as an investment:

This seems counter intuitive but there is a strong economic argument for failing more often.  As an example let’s say it takes 6 months and £250,000 to take a product or service from idea to launch. At best you’ll get two cycles in a year.

However, if you can do a complete cycle of learning in a week for £2000,  you can get 52 cycles in a year at about half the cost. Many of those cycles of learning will fail but will have less risk and negative impact than your latest big initiative. In the words of Andrew Stanton – “be wrong as fast as you can.”

Have a scientific approach:

Embracing failure does not mean having a lax approach or work environment. Failure can co-exist with high performance standards. Have a hypothesis and test it. Involve your data geeks and people who have no vested interests in seeing the idea succeed. If people start getting excited you have a discovery. If not – people will still feel it was worthwhile learning – but quickly move on to the next idea.

Capture the learning:

Failure is only bad if we are doomed to repeat it. Breaking our organisations out of cyclical failure is a huge challenge. Chris Bolton has asked if there’s a need for a Museum of Failed Products within public services. He’s undoubtedly right – the ‘corporate memory’ is often unreliable.

Don’t confuse this though with “We tried that before and it didn’t work.”  Just because things don’t work doesn’t mean you shouldn’t dust them down and give them another run out on a rainy day. Sometimes the timing just isn’t right.

Our organisations are heavily and successfully defended against failure

The high consequences of failure (and perceived consequences) lead over time to the construction of multiple layers of defence against failure. These include a variety policies and procedures, risk assessments, work rules, and team training all designed to tell us that failure is bad. These series of shields need to be balanced if you have any hope of legitimising failure.

  • Our future is best explored through a series of experiments rather than a one shot strategy.
  • These experiments should be carefully planned, so that when things go wrong we know why
  • They are by nature uncertain, so the outcome cannot be known ahead of time
  • They are modest in scale, so that a company catastrophe does not result
  • What is learned should be stored in the organisations memory and shared freely and widely

Ultimately intelligent failure is a learned skill that everyone can practice and strengthen.

If we can approach uncertain decisions as experiments and adopt the idea of intelligently failing, so much more can be learned.

A world where we can all admit we don’t have the answers but are committed to exploring them together, by trying things out rather than through politics or ideology, sounds an infinitely nicer place.


Feeling like a failure? Not interested in playing local lockdown lottery? Then make a lunch date with me and Ian Wright for our contribution to Digileaders week next Tuesday 13th October at 12pm where we explore real life failure experiences and why so many innovation initiatives don’t go to plan.

You can book your place here.

Innovating In An Age Of Uncertainty

Faced with uncertainty, those holding the purse strings will be tempted to stop the clock, peddle simplistic solutions and retreat to the past

We are living through an era of intense turbulence, disillusionment and accelerating change.

In any period of uncertainty, never mind a public health crisis and economic downturn of this scale, a company’s inclination can be to buckle down and focus solely on maintaining business as usual.

Innovation programmes deemed high risk and low return are often the first to be shelved as all efforts go into securing the bottom line. But they shouldn’t be, as innovation becomes more crucial when your business plan has just been thrown out the window.

In fact, creativity is in abundance during crises and when people are forced to accept new constraints. People who are behaving differently are also thinking differently – why wouldn’t an organisation want to capture that?

It often takes the reality of a genuine crisis to shake an organisation out of complacency. It can boost organisational courage and give it the impetus to take actions that would be unthinkable in times of calm.

However a crisis also brings with it an information overload, supplying us with overwhelming amounts of new data and choices. Faced with half facts, facts, figures and conflicting views of the future can lead many of us into a state of analysis paralysis.

In their article ‘When More Information Leads to More Uncertainty’, Geeta Menon and Ellie J. Kyung write that as humans, we innately find uncertainty to be an aversive state and are motivated to reduce it, even at a cost. Research has shown that people are calmer and less agitated when they know they are going to receive an electric shock than when they know there is a 50% chance they might receive an electric shock. Similarly, the threat of perceived job insecurity has more detrimental health effects than actually losing a job.

In many ways the crisis is just compressing and accelerating trends (remote work, job automation, the climate agenda, the possibility of a universal basic income) that would have taken decades to play out.

This uncertainty is affecting all colleagues in all our companies right now – and we underestimate it at our peril.

Some people cope with uncertain situations better than others, but I take issue with the idea that some are innately more resilient. Those that appear to thrive whilst others around them crumble under the pressure often face hidden wellbeing costs that emerge over the longer term. Resilience isn’t something that a person is blessed with, or not. It can be nurtured.

In the latest Bromford Lab Podcast , Ian Wright of the Disruptive Innovators Network talks about the challenges of innovating during a crisis and the number of employers who are now recognising the role that wellbeing plays not only in increased productivity, but also creativity. Refreshingly he says the organisations he is working with see the challenges presented by COVID-19 as an opportunity rather than a reason to scale back.

How do we prepare ourselves to make the best from a ‘crisis’? I’ll try and boil it down into three points that I think may help us on our way:

Eliminate triviality

COVID-19 should be a good time to get rid of organisational vanity projects or the trivial. I was reminded of this last week by Chris Bolton. In a post still fresh after nearly 10 years he outlines the Law of Triviality

Way back in 1957, Cyril Parkinson came up with the theory that organisations give disproportionate weight to trivial issues.

Image courtesy of Chris Bolton (@whatsthepont)

He used the example of a committee spending very little time to approve the construction of a nuclear power station. The committee then went on to spend much longer debating the construction and colour of a bike shed for the staff on the site. This came to be known as ‘bikeshedding’.

You and I know that all our organisations engage in bikeshedding – on a daily basis. Just check out the minutes of any meeting – that’s assuming any are even kept.

To create headspace for colleagues in the next normal we need to be more ruthless with the trivial then we ever have before – and apply our thinking time to the essential innovation challenges of our time.

Review Your Approach To Risk

In a crisis there’s no risk of rocking the boat, the storm has already hit.

In the podcast Ian talks about moving away from risk management and towards resilience management

When we initially pitched Bromford Lab the number one objective was to create an environment where failure was not just accepted , but encouraged. 75% of the things we worked on would fail.

This was not to create a culture that celebrated failure. It was to create a place where people felt it was safe to fail. They wouldn’t get punished for messing up.

It was to detoxify risk.

To promote learning from failure.

If we are to tackle the big problems rather than the trivial ones we WILL mess up, we WILL fail and we WILL learn. Embedding this approach in your risk management framework is necessary if we are to build resilience in colleagues. (You can learn more about the Bromford approach to risk management here)

Harness The Power Of Distributed Teams

There’s been two immediate trends we need to take advantage of:

  • The sudden shift to remote work as the default
  • Colleagues switching teams/being redeployed to support crisis management

So we’ve got a couple of things going on here than can lead to a spike in creativity.

Online tools and apps make it easier to assign, monitor, and communicate about the many tasks involved in building a collaborative team – outside of functional silos. This brings the opportunity to bring new people into mix – especially introverts who often don’t thrive in physical brainstorms. Introverts are ideally placed to absorb complex information about a problem and combine it into an elegant solution.

Secondly you’ve got the redeployment of colleagues into new teams who will bring a fresh pair of eyes to previously acknowledged and previously unseen problems.

This, managed well, will put some organisations in the driving seat of opportunity creation rather than mere crisis management.


It’s inevitable that faced with uncertainty, the knee jerk reaction of some of those holding the purse strings will be to stop the clock, peddle simplistic solutions and retreat to the past.

However it’s precisely because of these uncertain times that they must continue to invest in innovation. With the fast pace of change, and the pressures on our organisations and wider society, we need to find new ways to work and live.

Quickly.


Image courtesy of Free-Photos from Pixabay

The latest Bromford Lab Podcast is available now. Listen and subscribe on Spotify or Apple Podcasts or your favourite podcast app.

Does Regulation Really Stifle Innovation?

Last week I did a presentation to a group of managers when the issue of governance and regulation ‘getting in the way’ of innovation came up.

People often think regulations stifle innovation, new business and services. They assume that regulators are there to control and curtail what they want to do.

“We are so heavily regulated, we can’t change what we do” is a familiar cry from those in the public sector.

Is it true that regulators are blockers of innovation, or is it false perception?

Even worse – is this simply a convenient excuse used to resist change?

It’s true that if you looked at the websites and reports of most regulators you’d likely get a view that they are a pretty conservative bunch. There’s plenty of talk of consistency, best practice and benchmarking. And we all know that best practice and benchmarking are often just a race to be first at being average.

In reality though, when you meet face to face, I’ve never met a regulator who doesn’t want to see more innovation in their industry.

Last year I did two pieces of work, one for Ofwat, the economic regulator of the water sector in England and Wales, and the other for the Regulator of Social Housing. Both organisations were looking for ways to innovate within their own organisations and to spur on a greater drive for experimentation within their wider sectors.

It’s not in the interests of a regulator to be anti-innovation. A report last year  found that respondents were looking to regulators to support innovation, and to an extent most organisations are seeing this take place. 1 in 4 though see regulators as innovation blockers.

2018-10-04-080736299-How-do-you-see-regulators-impacting-innovation-in-your-sector

Part of the problem here is the definition of innovation, a disruptive pioneer (Uber for example) to one person is the unregulated aggressive exploiter of people to another.

Unregulated disruption is sometimes necessary. Had ride-sharing firms been prevented from entering the traditional taxi cab market, we would not be enjoying a better customer experience today. Arguably, the incumbents would never have improved their services left to their own devices.

In today’s world of speed and digital innovation though, regulators need adaptive regulations -and a more responsive, iterative approach.

That said – innovation gone bad requires regulation. Arguably “financial innovations” such as easy credit, subprime lending, mortgage-backed securities caused the financial crisis. It was a perfect storm to have uncontrolled innovation at the same time as encouraging light touch regulation.

Innovation as risk management

The fear of innovation within any organisation is far more likely to come from heavy handed approaches to governance and risk than it comes from external regulation.

At the event earlier this week, Ian Wright, Managing Director of the Disruptive Innovators Network asked a very good question: what is your risk patience? 

Most of our organisations and institutions lean toward control and order and away from chaos and risk.

How does your organisation actively seek out risk? Only 20% of strategy officers describe their organisation as risk seeking. We need to transform risk management from being about “stopping doing things” to being about “starting doing different things” within a well managed framework.

Traditionally we have not being good at focussing risk management on the right areas. Significant amounts of time are spent auditing areas that are highly unlikely to ever cause major reputational damage. This can be a huge inhibitor of potential innovation.

Whenever you innovate you’re taking a risk. What I’m anxious to get across to the public sector is that you DO need to take those risks – the Auditor General for Wales.

The work of the Wales Audit Office and in particular their Good Practice Exchange is a great example of an audit and assurance approach that encourages well managed risks

Innovation done badly IS a risk, but innovation done well is good risk management.

Having a framework that protects the host organisation from early stage experiments until they have proven value is actually good governance.

Orbit Innovation Event

The best approaches to innovation always have a way of framing and strategising, allocating and diversifying risk – whilst buffering the rest of the organisation from it. Organisations equipped with this will be less risk averse and conduct more risk-taking behaviour.

Ultimately, your organisation has plenty of excuses not to take risks, to stick to the tried and tested, to follow the same path as everyone else.

But fear of the regulator isn’t one of them.

Lessons Learned From Five Years of Failure

Sometimes the execution of the idea doesn’t need to be the best to succeed.

In 1989 a video game designer called Gunpei Yokoi changed the world with the launch of the original Nintendo Game Boy. It took gaming out of the hands of geeks and paved the way for the industry to become the most profitable and popular form of entertainment.

However the Game Boy was far from best in class. Its black and white display was made up from old technologies well past their sell by date. Gunpei called his philosophy Lateral Thinking with Withered Technology. 

Withered: mature technology which is cheap and well understood.

Lateral thinking: combining these ideas and technologies in creative new ways

Innovation doesn’t actually need to be cutting edge. Rather it needs to be simple, useful and to make someone’s day that little bit easier. 

This week I was invited by Ian Wright of the Disruptive Innovators’ Network to outline the lessons learned from five years of Bromford Lab about making innovation simple and accessible for colleagues.

I was speaking to L&Q Futures which has been put together by Tom Way to provide people with the digital mindset and skills of modern businesses while also looking for creative ways to solve the housing crisis. The 25 people selected via a competitive process are spending 1 day per month away from their day job to learn and apply the tools and techniques being taught.

The key things I wanted to put across were:

Five Years of Problem Solving with Bromford Lab (5)

Think big. Start small.

Most of our organisations avoid doing things because we let them get too complicated. It’s easy to talk yourself out of doing anything. If you wait for perfection before you put an idea to work, it will stall before it gets off the ground. The key for us is to assemble small teams with limited resources who are prepared to get their hands dirty.

Five Years of Problem Solving with Bromford Lab (4)

The idea is the driver

Most corporate structures are uniquely designed to ensure that any decent idea never goes near the top table. Structures that support hierarchical decision making limit opportunities for people to have influence and innovate.

We often don’t have a choice in the path our ideas take. They don’t fit within our structure charts or management meetings. You’ve got to develop a space and process that works around them and allows them to flourish. Let the idea go where it needs to go, and when.

Five Years of Problem Solving with Bromford Lab (3)

Don’t get distracted by Intergalactic Space Cats

Not all ideas are good ones. Some are very bad indeed. But even bad ones can prove worthwhile to look at, if only by helping to shape better alternatives.

Innovation is all about getting better at being wrong. However it must be founded in a deep understanding of the problem we are seeking to solve.

Everyone thinks that their idea is the one worthy of most attention.

Try and get the organisation to fall in love with problems rather than solutions.

Five Years of Problem Solving with Bromford Lab (1)

Everything is connected

People are working on the same things as us all over the world. We won’t solve things on our own. We are desperately inward looking. There will always be more talented people outside your organisation than within it – so lets seek them out. Collaboration is a central theme to innovation because of speed , connections, energy and the ability to fast track implementation.

The talent in our organisations is siloed. Our first task is to connect and leverage that talent and combine it with the creativity in our communities.

Five Years of Problem Solving with Bromford Lab (2)

Learning from failure is the measure to obsess about

Nielsen research suggests that “about two out of every three products are destined to fail.” However this is rarely acknowledged and hardly ever promoted. 

In the public sector , where projects take years rather than weeks,  and pilots become mainstream services without any evaluation – things are worse.

Nothing fails. Everything is a success.

Failure is only bad if we are doomed to repeat it. Breaking our organisations out of cyclical failure is a huge challenge.

At Bromford as part of our Lab Planning we meet to talk about failure every single week. We tweak our processes to learn from it and limit it. The real learning is in our stalled concepts, not the one’s that have been successful. 

Ultimately the message I tried to give was not to overthink things, keep a wide field of vision and try to think laterally.

In many ways I think an effective innovation approach is to encourage organisations to be more childlike. As kids we learned through exploration and experimentation, not through people talking at us from a PowerPoint presentation at a team meeting.

Our organisations need to relearn how to learn, rapidly and efficiently.

Learning and innovation go hand in hand, but learning always comes first.


 

This is a brief extract of the original talk – the full presentation can be seen here 

 

 

%d bloggers like this: